Office Depot Rallies Following New CEO Appointment and Earnings

When Office Depot Inc. (NASDAQ: ODP) reported its fourth-quarter financial results before the markets opened on Wednesday, the company said that it had $0.11 in earnings per share (EPS) on $2.73 billion in revenue. That compares with Thomson Reuters consensus estimates of $0.10 in EPS and revenue of $2.71 billion. The same period of last year reportedly had EPS of $0.06 and $2.77 billion in revenue.

As for Office Depot’s segments, they reported:

Retail Division sales were $1.37 billion, with an operating income of $62 million.

For 2017, Office Depot expects total company sales to be lower than 2016, primarily due to the impact of store closures, prior-year contract customer losses, one less selling week and continued challenging market conditions. But on the plus side, the company expects the rate of sales decline to improve throughout 2017, based on improvements in customer retention, implementation of new customer wins and continued growth in the contract channel sales pipeline.

On the books, Office Depot cash and cash equivalents totaled $763 million at the end of the quarter, down from $860 million in the same period from last year.

Gerry Smith, newly appointed CEO of Office Depot, commented:

I am very excited to assume the role of CEO and to inherit a business with such positive earnings trends. Office Depot delivered another year of improved profitability in 2016, exceeding the full-year adjusted operating income guidance, despite experiencing substantial business disruption related to the Staples acquisition attempt. The company made significant progress against its 2016 critical priorities and achieved substantial integration synergies, thanks to the hard work, commitment and dedication of the management team and associates. I believe we can continue this momentum in 2017, as we focus on stabilizing the top line, implementing our cost saving programs and executing on the key initiatives of the three-year strategic plan.

Shares of Office Depot were trading up 18% at $4.90 Wednesday morning, with a consensus analyst price target of $4.62 and a 52-week trading range of $3.01 to $7.91.